Just 2 charts for now

Although I'll be looking very closely at the market this weekend to try to coax some secrets out of it, I'm first going to take the night off and clear my head, erase any biases, get grounded and look at the market with a fresh pair of eyes. I think it's important to step back from the market and clear your head.

I spent many years in meditation and boy was I surprised. I thought meditation was supposed to be relaxing, maybe some forms are, but the kind I was trained in, translated in English as "Just Sitting" was anything but relaxing. Try to sit perfectly still focussing on nothing but good posture for 5 mins, just 5 mins. While everyone's journey is their own, I can tell you a few things you'll probably experience:

1)The list-things on your mind, things you need to do, etc-CORRECT, go back to focussing on posture.

2) The song, just pray it's not "Inagodavida"- CORRECT, back to posture

3) The Itch, a phantom itch that just grows more and more intense as you try not to scratch it -CORRECT, reset.

4) Peaking at the clock thinking you are at 4 minutes when you are really only at 1 minute-CORRECT

5) The Victory, you have 30 seconds of quiet and good posture and you realize it "I'm doing it!" Duh-Ooops, CORRECT

It's not easy, but that's not the point, the point is our minds are so busy and powerful, they'll do just about anything to not relinquish control, even create a phantom itch or focus on a bead of sweat moving 1 centimeter per minute.

Trading has a lot to do with psychology and even when we believe we are at our most unbiased state, the truth is, it's probably not true. It takes work to really look at the market free of bias and put together the many data points you find without drawing conclusions too early, which only causes you to look for more data points that validate your conclusion and that is not objective analysis, so I know when I need to step back and let everything dissipate, successes, disappointments, fear, greed, etc.

Sometimes I think it's a lot easier being a Cramer-type guru, all you need to do is sound like you are 100% positive all the time and point to the times you were right and brush the other times under the rug and guess what? People will go along with it, they'll brush it under the rug with you because the market is very emotional and very uncertain and people want to hear certainty, so much so they are willing to brush a lot under the rug; that's not good analysis or good investing.

Luckily I feel like we have a great group of traders here that understand the market is uncertain and understand that the market is about probabilities and most of all, are willing to think for themselves rather than blindly follow a guru. Our members understand the market isn't conducive to Gurus, it's a lifelong learning experience. That being said, I think because of our approach as lifelong students, we have some great tools and have a much better understanding of the market than most traders who base everything they do on several of their favorite trading books or financial pundits.

So, I'll clear my head, and look at the pieces of the puzzle and see if there are enough pieces to say, "This is the most likely probability".

Until that analysis, I have only 2 charts to show you.

 First this is where we are, it looks like a rectangle here after an extended downtrend (on this timeframe), but it's really closer to a flag, a bear flag, which means most traders are viewing the immediate future as one in which the market will break down shortly and the NYSE record 2012 short interest speaks to that. I don't think I need to convince anyone of my bearish perspective, but I also know the market is not as simple as that.

Lets just take a look a several months and what the market did, what traders expected and how the market made sure it wasn't as simple as it appeared. First we had 3 bounces that made higher highs/higher lows (I believe we called all 3 from bottom to top and back to bottom again near perfectly). Traders would take this as an uptrend, that is what it is (higher highs/higher lows), but we had additional information and used those moves higher to start short positions, then instead of the trend continuing up, the market saw a sharp decline and formed a bear flag. Now traders see a bear flag and expect the market to break down, the market did (in the yellow box), but it was a head fake, drawing in shorts on the break and then stopping them out as the market moved higher, we shorted here again. In the orange box there was strong upward momentum, that same day that it started we not only predicted what would happen, but 3C confirmed it and that strong, bullish momentum fell just as quickly as it went up. Since then we've been in decline and have formed another bear flag. Technical traders will view this as a bearish lag that will break down to start a new leg down, but as you can see over the past 4 major moves, Technical Analysis said one thing and the market did the opposite in the near term. If you don't believe traders see this bear flag and are shorting it, just look at yesterday's 2012 record NYSE short interest.

If we follow what we have known for a long time, the probabilities are for a solid bounce knocking those shorts out again, making the average trader wrong again. That's where the signals have been lining up, that's where the market trend probabilities are.

The difference between now and all of the other moves that we got right and used to our advantage is an unstable situation in Greece that I don't think the market can discount as it is an organic movement, not something one of their ex-Golman Prime Ministers can tip them off to. That's where the danger to near term assumptions lies. This is the increasing unpredictability I predicted weeks ago, I just had no idea how bad the situation wold be. I'll address the Greek situation as it is part of what will move the market both in the long term and perhaps the near term.

This is why I really need to have a clear head and look for any clues that are hiding in the data.

As for our bigger picture view, it's all good news and if you've been shorting in to strength you should feel pretty good about where we are right now, my short positions are all green, but I sure would like one final move to fill them out. This weekend I'll be looking for the evidence that give us the highest probability outcome. Right now I suspect it hasn't changed much, but that' exactly why I need to clear my head, focus on my posture and look at the market with new eyes.

Have a great weekend everyone.